Solardammerung: The twilight of Germany’s green-energy subsidies

posted at 12:10 pm on February 20, 2012 by Ed Morrissey

When the global-warming hysteria hit its peak, no Western nation responded with as much commitment to it than Germany. Over a period of several years, the German government spent $130 billion on solar energy in an attempt to transform its energy production and use by becoming the “photovoltaic world champion.” How has that worked out? As Bjorn Lomborg writes for Slate, solar energy now accounts for a whopping 0.3% of Germany’s total power consumption [see update below] after that $130 billion infusion, and forces Germans to pay far more than their Continental counterparts for their energy.

Now the Germans may lead the way to abandoning the global-warming hysteria and subsidy approach to alternative-energy economics:

Germany once prided itself on being the “photovoltaic world champion”, doling out generous subsidies—totaling more than $130 billion, according to research from Germany’s Ruhr University—to citizens to invest in solar energy. But now the German government is vowing to cut the subsidies sooner than planned and to phase out support over the next five years. What went wrong?

Subsidizing green technology is affordable only if it is done in tiny, tokenistic amounts. Using the government’s generous subsidies, Germans installed 7.5 gigawatts of photovoltaic capacity last year, more than double what the government had deemed “acceptable.” It is estimated that this increase alone will lead to a $260 hike in the average consumer’s annual power bill.

According to Der Spiegel, even members of Chancellor Angela Merkel’s staff are now describing the policy as a massive money pit. Philipp Rösler, Germany’s minister of economics and technology, has called the spiraling solar subsidies a “threat to the economy.”

Lomborg recites a litany of bad outcomes from the German experiment. Thanks to carbon caps, the use of solar to even its very limited capacity hasn’t actually reduced carbon emissions at all. It merely allows other EU nations, like Portugal and Greece, to emit more carbon through coal-fired power generation at the expense of German industry. Until now, Germans pointed at the jobs created in the green-tech industries, but as Lomborg notes, those come at a hefty price tag of $175,000 per position, far more than would have been the case with normal infrastructure projects. Many of those jobs didn’t get created in Germany anyway; Germans ended up subsidizing job creation in China.

Lomborg also includes this rather telling calculation:

Moreover, this sizeable investment does remarkably little to counter global warming. Even with unrealistically generous assumptions, the unimpressive net effect is that solar power reduces Germany’s CO2 emissions by roughly 8 million metric tons—or about 1 percent – for the next 20 years. To put it another way: By the end of the century, Germany’s $130 billion solar panel subsidies will have postponed temperature increases by 23 hours.

Germany led the way into hysteria; now circumstances have forced Germany to lead the way back to common sense and fiscal sanity. The real question will be whether the rest of the Western world learns the lesson the easy way or the hard way. So far, the Obama administration seems determined for the US to learn it the hard way.

Update: The 0.3% figure comes straight from Lomborg’s article at Slate, but I’ve received two messages that says it should be 3%. However, the data from the German Ministry for Economics and Technology shows that German consumption of hydroelectric, wind, and solar amounts to a combined total of 1.8% of all consumption for 2011, which was its best year ever. That seems to reinforce Lomborg’s claim and not those from other sources.

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